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Understanding Deforestation Risk, or: How I ended up on TV talking about toilet paper

By Thomas Peterson

I never expected to appear on national television offering the investor perspective on toilet paper, but last week I ended up on CBS doing exactly that.

I’ll back up and explain how I got here. A few years ago, I read Richard Powers’ The Overstory, a remarkable novel about trees, people who love them, and the destruction of forests. The book altered the trajectory of my life, and I’m not the only one. Barack Obama wrote that it “changed how [he] thought about the Earth and our place in it.” Up late one night, unable to put the book down, I made a commitment to myself that I would do what I could to protect the earth’s remaining forests.

I am now working as a Shareholder Advocate with Green Century Capital Management,° where I leverage the firm’s clout as a shareholder to push companies to address deforestation risk. Roughly half of all deforestation is driven by the production of forest-risk commodities, primarily beef, palm oil, soy, and wood pulp, paper, and timber. By pressing large companies to adopt strong policies to prevent deforestation in their supply chains, we aim to limit the risks that commodity-driven deforestation poses for portfolios and the planet.

Deforestation is among the largest contributors to the climate crisis, and it therefore poses systemic risks to companies and the financial system. Deforestation also contributes to biodiversity collapse and the loss of ecosystem services, endangering agricultural production and creating physical and transition risks for companies that source these commodities. Companies associated with deforestation also face regulatory, litigation, and reputational risks.

Green Century has been working to protect forests for roughly a decade and, thanks in no small part to the firm’s advocacy, investors and corporations alike are increasingly recognizing the material risks posed by deforestation.

Last October, we received a major signal that investors are finally taking deforestation seriously: for the first time ever, a majority of shareholders voted for a proposal regarding deforestation at a company’s annual shareholder meeting.

The proposal, put forward by Green Century, asked Procter & Gamble* — the largest consumer goods company in the world, maker of Charmin toilet paper and Bounty paper towels — to address deforestation and forest degradation in its wood pulp and palm oil supply chains. An unprecedented 67% of shareholders supported the proposal, in spite of Procter & Gamble’s opposition.

Procter & Gamble has received significant attention from environmental campaigners in recent years because of its refusal to shift towards recycled or alternative fibers to make its tissue products. Instead, the company continues to produce toilet paper and paper towels entirely from virgin fiber, much of it from the climate-critical boreal forest in Canada.

Despite the overwhelming support of shareholders for last year’s Green Century proposal, P&G has not wavered in its stance. The company made some small improvements to its forest policies this spring, but it plans to continue turning remarkable trees in the Canadian boreal into toilet paper.

This has inspired the descendants of P&G’s founders to come forward to criticize the company’s environmental impact. CBS Mornings, the network’s national morning show, interviewed Justine Epstein and Jules Feeney, sixth-generation descendants of James Gamble, who described the company’s practices as “absurd.” It was a compelling story of corporate heirs coming forward to push their family company to do the right thing.

But CBS wanted to include other perspectives as well, so they invited Green Century to offer our take as investors. During my interview with CBS investigative journalist Anna Werner, I clarified that while P&G has met regularly with Green Century and revised some of their forest policies, it has not addressed the “fundamental issues” that provoked last year’s vote. Green Century will continue to engage with P&G to ensure that these risks are addressed.

In The Overstory, Richard Powers put it better than I ever could: “What you make from a tree should be at least as miraculous as what you cut down.” Popular as they may be, Charmin and Bounty don’t hold a candle to the miraculous trees of the world’s largest intact forest, the greatest terrestrial carbon sink on the planet.

Investors and the public have made it clear that it’s time for Procter & Gamble to stop flushing the boreal, and I’m grateful to have had the opportunity to spread that message to viewers nationwide. While it was never my plan to make my TV debut serving as a toilet paper expert, if it helps to protect our remaining forests then it was more than worth it.


About Green Century Capital Management

°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. Green Century Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.

*As of September 30, 2021, The Procter & Gamble Company comprised 0.59%, 1.76% and 0.00% of the Green Century Balanced Fund, the Green Century Equity Fund and the Green Century International Index Fund. As of the same date, other securities mentioned were not held in the portfolios of any of the Green Century Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.

You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email, or call 1-800-934-7336. Please read the Prospectus carefully before investing.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

This information has been prepared from sources believed reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.

The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 10/21